2024 will arrive before Ohio lawmakers resolve adult-use marijuana law

Ohio state lawmakers are poised to finish 2023 without making promised changes to the adult-use marijuana legalization initiative voters passed in November.

Instead, the Ohio General Assembly will enter 2024 with advocates, including existing industry operators, pushing for an accelerated opening date for what could be a $2 billion legal cannabis market within a year.

For now, the lack of promised action is easing industry fears of a major rewrite of the new adult-use law, including a state Senate-proposed elimination of a social equity program and a de facto ban on concentrated cannabis.

Ohio became the 24^th state to legalize adult-use cannabis when more than 57% of voters approved Issue 2 last month.

Possession and home-grow cultivation became legal Dec. 7, and state regulators are authorized to start issuing adult-use business licenses within nine months.

Sales are projected to reach as high as $2 billion in the first full year of sales before doubling to $4 billion by year four, according to the 2023 MJBiz Factbook.

However, Ohio law grants elected representatives near-unlimited leeway to modify voter-approved initiatives.

And General Assembly lawmakers marked Issue 2 – opposed by Gov. Mike DeWine, House Speaker Jason Stephens and Senate President Matt Huffman, all Republicans – for edits well before Election Day.

Last week, the state Senate raised alarm bells among industry players and social justice advocates with a “compromise” proposal that critics said modified Issue 2 well beyond what voters intended, with new limits on home cultivation, new criminal penalties, higher taxes, a de facto ban on cannabis concentrates and the elimination of social equity provisions.

That proposal also included a statewide cap on adult-use business licenses.

These changes, tucked into a previously unrelated bill that concerned alcohol, were always near certain to fail in the state House of Representatives, where pro-cannabis Republican lawmakers are opposed to such tweaks.

Then, on Tuesday, Stephens said there would be no vote on any marijuana-related bill the next day – the Assembly’s last scheduled day of business before the holiday recess.

One reason for the delay are the “misalignments between the House and the Senate and the governor on some key points,” Democratic House Minority Leader C. Allison Russo told reporters on Tuesday.

She flagged the Senate’s proposed THC-potency cap – which is “inconsistent” with the state’s medical marijuana law – as one major sticking point.

In the meantime, Issue 2 as written stands – including existing home-grow provisions.

But when legislative business in Columbus resumes in January, so will a push to launch legal adult-use cannabis sales at existing medical marijuana dispensaries before next fall, multiple sources told MJBizDaily.

“The Ohio Legislature should consider expediting legal sales, providing there’s language to ensure patient access,” said Karen O’Keefe, the director of state policies at the Marijuana Policy Project, which was one of the bankrollers of Issue 2.

“Failing to do so means the only place to buy cannabis over the next nine months will be from the illicit market and from Michigan.”

Good for existing operators

A quicker adult-use launch limited to previously licensed businesses would stand to benefit existing operators in Ohio.

They include some of the country’s biggest multistate operators: New York-based Acreage Holdings, Chicago-headquartered Cresco Labs, New York-based Curaleaf Holdings, Chicago-headquartered Green Thumb Industries as well as Florida-based Jushi Holdings and Trulieve Cannabis.

And with the rampant illicit markets currently overpowering legal cannabis in New York and Virginia, they’ll be ready with cautionary tales of what can happen when lawmakers delay too long.

“The longer you have legal possession without legal procurement, the illicit market proliferates rapidly,” said Trent Woloveck, chief strategy director at Jushi, which owns an MMJ dispensary in Cincinnati under the brand name Beyond Hello.

It would also deliver on legal marijuana’s promise in Ohio, where existing operators have been struggling through a restrictive MMJ program in hopes of a payoff from adult use.

Under the current medical marijuana program, 37 licensed cultivators and 114 dispensaries together serve 178,703 registered patients, according to the Ohio Medical Marijuana Control Program’s most recent data.

That’s well below the patient density seen in other states.

Nearby Pennsylvania, with a population of almost 13 million to Ohio’s 11.8 million, has 433,638 active patients, according to a November count.

From bad to good to neutral

Fears that the Legislature would drastically rewrite Issue 2 materialized in early December.

After initially proposing to eliminate home-grow provisions entirely, the state Senate on Dec. 6 – the day before possession became legal – floated a “compromise” plan that still made changes to Issue 2 well beyond what advocates could swallow.

Despite Issue 2’s language being public for nearly two years, the changes materialized over a few days, with quick legislative hearings and “almost no opportunity to hear from voters,” attorney Tom Haren, who served as the Issue 2 campaign spokesperson, told MJBizDaily in phone interview.

“This is not how thoughtful lawmaking happens,” he said. “That is not what the people voted for on Nov. 7.”

That bill also contradicted competing legislation in the House, including Rep. Jamie Callender’s proposed HB 354, which would cement much of Issue 2 in a General Assembly-approved state law.

Callender, Stephens and other state lawmakers did not respond to MJBizDaily requests for comment.

HB 354 is scheduled to be heard in committee on Wednesday without any vote to advance it to the full floor.

That means, barring any unforeseen moves toward calling an extraordinary emergency session solely for marijuana, the next time the General Assembly can take up the bill is January.

And Stephens, the House speaker, is in “no rush” to pass adult-use legislation, Columbus-based sources told MJBizDaily.

Russo concurred in her media gathering Tuesday, noting that “we could be dealing with this (issue) this week, in January or as late as April or not at all.”

“That’s also on the table as well,” she added, “because Issue 2 will move forward as passed by voters.”

Status quo

Unless lawmakers take action, at minimum, “we will have adult (use) sales nine months from Dec. 7,” Jushi’s Woloveck said.

That said, any bill that would hasten “co-located” adult-use sales at MMJ dispensaries would be “huge,” he added.

Other operators also called for a final law that’s closely aligned with Issue 2, though with a quicker path to recreational sales.

“The most important thing is that we stay true to what the voters wanted,” said Kate Nelson, regional executive vice president at Acreage Holdings, which acquired Ohio-based vertically integrated operator Greenleaf Gardens in 2021.

Ohio’s highly regulated medical marijuana program means it should be “easy for (existing) operators to pivot” to adult-use sales, she added.

However, until a concrete proposal reaches the governor’s desk, “it’s all open season,” said Douglas Berman, a law professor at Ohio State University who studies drug policy.

And the past two weeks demonstrate just how far apart the two Assembly chambers are.

“The fact they (the state Senate) had such a restrictive proposal on (Dec. 4) and passed a much-less-restrictive proposal on (Dec. 6) gives me the sense they don’t have an agenda – nobody knows what to do or how to do it,” Berman added.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.